By Cate Hull
As the CEO of a freight and logistics company, I am mindful that world trade in 2019 resides in a complex universe.
Tariffs, sanctions and a dynamic trading environment create shipping challenges.
Thankfully, the International Maritime Organization (IMO), a specialized agency of the United Nations, exists. IMO is the global standard-setting authority for the safety, security, and environmental performance of international shipping. Its main role is to create a regulatory framework for the shipping industry that is fair and effective, universally adopted and universally implemented.
These days, IMO is stepping up enforcement on rogue shipping companies trying to use flag registries fraudulently to conceal their activities, according to a Reuters report.
All commercial ships must be registered – flagged in a country – partly to comply with safety and environmental laws.
With international and U.S. sanctions imposed on countries including North Korea, Iran and Syria, some ships involved in such trade have used tactics to sidestep the measures including turning off their location transponders and falsely reporting their flag registry, also to secure insurance.
Drug and weapon smuggling are among other areas of trade in which front companies attempt to conceal their activities to avoid being detected.
IMO agreed on a series of measures after a recent legal committee session which included the creation of a comprehensive database of registries and ways to improve information on the illegal registration of ships, the IMO said.
The IMO will also work with the U.N. Security Council to create a searchable database that would show vessels subject to U.N. resolutions. The work is expected to be completed in 2021.
“Experience has shown that the raison d’être of fraudulent registries is to conceal illicit activity on board vessels, including activities prohibited by United Nations sanctions,” the United States said in one submission to the IMO.
Multiple countries have reported to the IMO that their registries had been used without the knowledge of the maritime authority for fraudulent purposes through fake documents or even maintaining the flag after it had been terminated.
Tanzania said it had experienced more than 20 cases of the fraudulent use of its flag since 2016, discovered after collaboration with other countries.
Ukraine, meanwhile, says shipments from Crimea violate Western sanctions and has complained to the IMO, asking member states to de-list any vessels involved. Crimea has been under Western sanctions since Russia annexed it from Ukraine in 2014.
This week, a mandatory electronic information exchange between ships and ports went into effect for national governments.
The aim is to make cross-border trade simpler and the logistics chain more efficient, for the more than 10 billion tons of goods which are traded by sea annually across the globe.
The requirement is part of IMO’s Convention on Facilitation of International Maritime Traffic (FAL Convention), adopted in 2016.
“The new FAL Convention requirement for all public authorities to establish systems for the electronic exchange of information related to maritime transport marks a significant move in the maritime industry and ports towards a digital maritime world, reducing the administrative burden and increasing the efficiency of maritime trade and transport,” said IMO Secretary-General Kitack Lim.
Cate Hull is the CEO of FreightExchange, a freight and logistics company based in Sydney.